What is a public limited company?

A public limited company, as defined by the Companies Act 2013, is an incorporated business entity that offers its shares to the general public through public trading on stock exchanges. It is characterized by limited liability, meaning shareholders’ financial responsibility is limited to their investment in the company. Public limited companies must adhere to regulatory requirements regarding disclosure, reporting, and corporate governance. They typically have a minimum number of shareholders and directors. These companies play a vital role in the economy by raising capital from the public for business expansion and investment, while also being subject to greater regulatory oversight compared to private limited companies.

What is an example of a public limited company?

Here are 5 examples of public limited companies based in India:

Reliance Industries Limited: Industry: Conglomerate (Petrochemicals, Oil & Gas, Telecommunications, Retail)
Tata Consultancy Services Limited (TCS): Industry: Information Technology (IT) Services
Infosys Limited: Industry: Information Technology (IT) Services
HDFC Bank Limited: Industry: Banking, Financial Services
Reliance Communications Limited: Industry: Telecommunications

What does a public limited company do?

Under the Companies Act 2013, a public limited company (PLC) operates within a regulatory framework that governs its formation, management, operations, and dissolution. Here’s how a public limited company typically functions by the Companies Act 2013:

Incorporation: A PLC is formed by registering with the Registrar of Companies (RoC) under the provisions of the Companies Act 2013. The company’s memorandum and articles of association must comply with the requirements specified in the Act.
Share Capital: A PLC must have a minimum paid-up share capital as prescribed by the Act. It can issue shares to the public, and the shares are freely transferable subject to certain conditions specified in the Act.
Management Structure: A PLC is managed by its board of directors, which is elected by the shareholders. The Act specifies the composition, powers, duties, and responsibilities of directors, including the appointment of independent directors and the constitution of board committees.
Corporate Governance: The Companies Act 2013 lays down corporate governance standards for PLCs, including provisions related to board meetings, audit committees, related-party transactions, and disclosure requirements. PLCs are required to comply with these standards to ensure transparency, accountability, and fairness in their operations.
Financial Reporting: PLCs must prepare and file annual financial statements, including balance sheets, profit and loss accounts, cash flow statements, and other prescribed documents, with the RoC. These financial statements must comply with accounting standards specified in the Act.
Shareholder Rights: Shareholders of PLCs have certain rights as provided under the Companies Act 2013, including the right to vote on key matters such as appointment and removal of directors, approval of financial statements, declaration of dividends, and alteration of the company’s capital structure.
Regulatory Compliance: PLCs are subject to various regulatory requirements under the Companies Act 2013, as well as rules, regulations, and guidelines issued by regulatory authorities such as the Securities and Exchange Board of India (SEBI) and stock exchanges. Compliance with these requirements is essential to avoid penalties and sanctions.
Corporate Actions: PLCs may undertake various corporate actions such as mergers, acquisitions, amalgamations, demergers, and capital restructuring, subject to approval from regulatory authorities and compliance with provisions laid down in the Companies Act 2013.
Corporate Social Responsibility (CSR): The Act mandates certain classes of companies, including PLCs meeting specified criteria, to spend a portion of their profits on CSR activities as defined in the Act. Compliance with CSR obligations is mandatory for PLCs falling within the prescribed criteria.
Dissolution and Winding Up: If a PLC decides to wind up its operations voluntarily or is ordered to do so by the court, it must follow the procedures laid down in the Companies Act 2013 for dissolution, liquidation, and distribution of assets to creditors and shareholders.

What advantages of a public limited company?

1. Access to Capital: PLCs can raise significant capital by selling shares to the public through stock exchanges. This allows them to fund expansion, invest in new projects, and finance research and development efforts.

2. Limited Liability: Shareholders of a PLC enjoy limited liability, meaning their assets are protected from the company’s debts and obligations. This encourages investment and reduces the risk for shareholders.

3. Enhanced Credibility: Publicly listed status can enhance a company’s credibility and reputation. Being listed on stock exchanges provides transparency and accountability, which can instill confidence in customers, suppliers, and investors.

4. Liquidity of Shares: Shares of a PLC can be easily bought and sold on stock exchanges, providing liquidity to shareholders. This liquidity makes it easier for investors to enter or exit their positions, increasing the attractiveness of investing in the company.

5. Employee Benefits: PLCs often offer stock options, share incentive schemes, and other equity-based benefits to employees. This aligns the interests of employees with those of shareholders and helps attract and retain top talent.

How does Auriga accounting help you to register a public limited company?

Consultation and Advisory Services: Auriga Accounting may offer consultation and advisory services to guide businesses through the process of registering a public limited company. This could include determining the most appropriate legal structure, explaining the requirements and implications of becoming a public company, and providing advice on compliance with relevant regulations.
Legal Assistance: Auriga Accounting may work with legal professionals or have legal expertise in-house to assist with the legal aspects of registering a public limited company. This could involve drafting and filing the necessary documents with the relevant government authorities, such as the Registrar of Companies, and ensuring compliance with the Companies Act or other applicable legislation.
Documentation Preparation: Auriga Accounting can help prepare the required documentation for registering a public limited company, including the memorandum and articles of association, incorporation documents, director and shareholder agreements, and other relevant paperwork.
Regulatory Compliance: Auriga Accounting can assist with ensuring compliance with regulatory requirements governing the registration of public limited companies. This may include compliance with financial reporting standards, corporate governance guidelines, and other regulatory obligations.
Coordination and Representation: Auriga Accounting can act as intermediaries between the business and regulatory authorities during the registration process. They can coordinate communications, represent the business’s interests, and handle any queries or requests for additional information from the authorities.
Post-Incorporation Services: Auriga Accounting may offer additional services following the registration of a public limited company, such as ongoing compliance support, financial reporting, tax planning, and other advisory services to help the company operate effectively and efficiently.